Patently Wealthy: Inventor Gains Millions By Suing Automakers
The Detroit News
ASPEN, Colo. - For nearly three decades, 70-year-old inventor Jerome Lemelson has worked for no one but himself.
But last year, he collected about $400 million from some of the world's largest companies, and now he aims to extract a comparable payment from Detroit's automakers.
"They stole my ideas," insists Lemelson. He is suing General Motors Corp., Ford Motor Co. and Chrysler Corp. for patent infringement.
Lemelson, who lives near Lake Tahoe, Nev., has demanded hundreds of millions of dollars in royalties on a batch of high-tech manufacturing devices he says he invented. He wants a federal court to bar the big three automakers from using the devices - which could shut down assembly lines across the country.
"It could have a devastating effect," said Jesse Jenner, a New York lawyer representing Ford. "A claim like this is a sword that hangs over the head of companies like Ford, but also the whole chain of suppliers and all of Ford's employees."
Lemelson scoffed at the suggestion that he poses a threat to the industry. "I'm a lone inventor," he said. "I have a few attorneys working for me. How much can I do?"
So far, plenty. Last year, Lemelson persuaded 12 Japanese automakers to pay $100 million on the same patents he says GM, Ford and Chrysler are infringing. Eight European automakers paid undisclosed sums. Other licensees included electronics behemoths Sony Corp., Siemens AG and NEC Corp.
Lemelson's lawyer, Gerald Hosier, said Lemelson's earnings for the year exceeded $400 million. Lemelson also seeks fees from dozens of electronics and semiconductor firms - including Motorola, Eastman Kodak, Unisys and Apple Computer.
Lemelson, with some 500 patents, is the nation's most prolific living inventor.
By alleging infringement, Lemelson essentially accused the Big Three Detroit automakers of using his ideas without permission. He claims he first conceived the ideas and first patented how they might be applied.
Lemelson patents dating to the mid-1950s describe ways of coupling computers with cameras to gather and analyze information. Today, he says, the concepts are the basis for machine-vision, bar-coding and other image-reading devices used in factories.
Bar-coders, for example, are familiar as supermarket price-scanners. In auto plants, they read codes printed on auto parts. The computer-stored data helps automakers trace defects and control inventory. That improves quality control and reduces cost.
But the automakers say that, among other things, Lemelson's patents are too vague to be linked to such modern devices.
GM, Ford and Chrysler portray Lemelson in court documents as a clever opportunist who exploits the patent system. Most of Lemelson's inventions exist solely on paper at the U.S. Patent and Trademark Office, the automakers and other critics say. He rarely builds prototypes.
His patents, some nearly 30 years old, describe technologies that only remotely resemble their modern counterparts, the critics add.
The automakers say Lemelson couldn't have conceived machine-vision, bar-coding and other such devices in the 1950s, before the development of powerful computers and other high-tech apparatus that make them work.
"It's like taking the book `20,000 Leagues Under the Sea' and saying Jules Verne is entitled to a patent on modern nuclear submarines," Jenner said. Ford argues in court documents that one Lemelson patent is so ambiguous, "It encompasses everything from the human eye to common automatic 35mm cameras."
Some specialists say the automakers' complaints are predictable.
"You have to take all this with an enormous grain of salt," said Irving Kayton, professor emeritus at the George Mason University Law School in Fairfax, Va. "There has never been an infringer who hasn't said the (inventor) was a crook and a thief."
Lemelson claims rights on a vast array of products, including VCRs, camcorders, robots, fax machines, lasers and cordless phones.
"You can't make a (computer) chip today without my patents," Lemelson said in a recent interview at Hosier's Colorado home. "You can't make a quality TV set or VCR."
Lemelson wrote to hundreds of companies he believed were infringing his patents. But he didn't hit the jackpot until he hooked up with lawyer Hosier. The stocky Chicagoan had won several multimillion-dollar disputes when Lemelson hired him in 1988.
The lawyer devised an aggressive strategy. Starting in 1989, via fax and mail, he warned more then 100 auto, electronics and semiconductor firms that they were infringing on Lemelson patents. Hosier asked them to pay fees or face suits.
Just as Hosier started sending letters, Lemelson won a $71.2 million judgment against Mattel Inc. for infringing patents he claimed on the popular Hot Wheels toy.
More companies started negotiating. Then came last year's $400 million windfall.
A patent appeals court overturned the Mattel decision last June - a ruling upheld by the Supreme Court last January. In between the Mattel rulings, though, Lemelson sued GM, Ford and Chrysler.
Lemelson seeks one-50th of 1 percent of the selling price of every vehicle sold over the next 10 years - or about $300 million, Hosier said.
If the case goes to trial - at least a year from now - the automakers stand to lose more than $1 billion, Hosier said.
Attorney Jenner, representing Ford, said foreign firms are more inclined to settle because they fear the U.S. legal system. The Japanese are especially wary of litigating the politically touchy subject of intellectual property, Jenner said.
Lemelson said GM, Ford and Chrysler miss the point if they think his concerns are purely financial.
"What they don't realize is, I don't need money anymore," he said. "They can't hurt me now. I'll see it through to the end."
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